[World Tax News] UAE Releases Norms for Maintenance of TP Documents and more…

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. UAE Govt. releases norms for maintenance of TP documents for Corporate Tax Law

The Finance Ministry of UAE issued Ministerial Decision No. 97 of 2023, specifying the requirements for the maintenance of Transfer Pricing (TP) documentation for the purposes of taxation of corporations and businesses. The decision also listed down the requirement of maintaining the Master file and Local file.

(a) Maintenance of both Master File and Local File

A person that meets either of the following conditions shall maintain both a master file and a local file:

• Taxable persons that are part of a Multinational Enterprises Group having a total consolidated group revenue of AED 3.15 billion or above in the relevant tax period.
• Taxable persons whose revenues are AED 200 million or abovein the relevant tax period.

(b) Transactions to be included in Local File

The Taxable Person shall include transactions or arrangements with all of the following

Related Parties and Connected Persons in the local file:

• A Non-Resident Person;
• An Exempt Person;
• Resident Person that has been elected for Small Business Relief; and
• Resident Person whose income is subject to a different corporate tax rate.

(c) Transactions not to be included in Local File

The Taxable Person shall not include transactions or arrangements with the following Related Parties and Connected Persons in the local file:

• Resident Person other than those specified above.
• A Natural Person, as long as the parties to the transaction or arrangement are acting independently of each other
• A Judicial Person, who is a related party or a connected person because of being a partner in an unincorporated partnership as long as the parties to the transaction or arrangement are acting independently of each other.
• A Non-resident person having a Permanent Establishment in the UAE and whose income is subjected to the same corporate tax rate.

(d) Transactions that are considered independent of each other

The parties engaged in the transaction or arrangement shall be considered acting as if they were independent of each other where both of the following conditions are met:

• The relevant transaction or arrangement is undertaken in the ordinary course of Business.
• These parties are not exclusively or almost exclusively transacting with each other.

Source: Ministerial Decision No, 97 of 2023

2. Companies undergoing liquidation proceedings are exempt from paying UAE corporate tax

The Finance Ministry of UAE publishes a Ministerial Decision No. 105 of 2023 determining the conditions under which a person may continue to be deemed an exempt person or cease to be an exempt person for the purposes of the taxation of corporations and businesses. The decision aims at ensuring a transparent and efficient tax system that promotes business growth in the UAE.

The decision outlines that a person will be deemed an exempt person from the date of its liquidation or termination until the date it is completed. However, the deeming provision will only be applicable if notification of this is submitted to the authority within 20 business days from the date of the beginning of the procedures.

The Ministerial Decision has listed down four conditions that are required to be met by a person to continue to be deemed as an Exempt Person for the purpose of Corporate Tax Law.

Source: Ministerial Decision No. 105 of 2023

3. Peru extends tax exemption for religious institutions, non-profits, and other entities

On 22 April 2023, Peru released Legislative Decree in the Official Gazette, extending the income tax exemption granted by Article 19 of the Income Tax Act to several entities. The tax exemption is provided for the following incomes:

(a) Income of qualifying religious societies or institutions;

(b) Income of qualifying foundations or non-profit associations incorporated for charity, social assistance, education, cultural, scientific, artistic, literary, sports, political, trade union, and/or housing purposes;

(c) Interest from development credits (financing) granted directly or through suppliers or financial intermediaries by international organizations or foreign government institutions for development projects in Peru in relation to infrastructure and public services, as well as micro-enterprise financing;

(d) Income generated from the performances of foreign sportspersons in Peru;

(e) Income generated from the performances of foreign artists in Peru;

(f) Royalties for technical, economic, financial, or other advice provided from abroad by state entities or international organizations.

These income tax exemptions, which were previously available until 31st December 2023 have now been extended until 31st December 2026.

Source: Legislative Decree No. 1549

4. Greece mandates Tax Residency Certificate applications through myAADE Digital Portal

The Greek Public Revenue Authority (AADE) issued Decision A. 1052 with regard to the digital issuance of tax residence certificates.

Starting from May 2023, individuals or legal representatives of companies are required to file their application for a tax residence certificate through the myAADE digital portal.

The application must include information on the administrative region, the relevant year, and the category of income earned abroad. Additionally, applicants must declare their intention to submit a tax return the following year, which includes any foreign income. If an applicant seeks certificates for multiple categories of income, years, or administrative regions, separate applications must be filed.

Source:

• Decision A. 1052 of 13 April 2023
• myAADE digital portal